Answer :
To determine if your friend has overlooked any significant elements in his monthly budget, let's analyze the provided data in a structured manner. The key information is:
Cash Inflows:
1. Disposable income: \[tex]$4,165 2. Interest on savings: \$[/tex]0
3. Income from stocks: \[tex]$50 4. Total Cash Inflow: \$[/tex]4,215
Cash Outflows:
1. Mortgage: \[tex]$1,000 2. Homeowner's Insurance: \$[/tex]60
3. Car payment: \[tex]$373 4. Car insurance: \$[/tex]125
5. Stock purchases: \[tex]$200 First, we calculate the total cash outflow by summing up all the provided outflows: \[ \text{Total Cash Outflow} = 1000 + 60 + 373 + 125 + 200 = 1,758 \text{ dollars} \] Next, we determine the balance by subtracting the total cash outflow from the total cash inflow: \[ \text{Balance} = \text{Total Cash Inflow} - \text{Total Cash Outflow} \] \[ \text{Balance} = 4,215 - 1,758 = 2,457 \text{ dollars} \] Now, we need to compare the calculated outflow with the expected outflow. The expected outflow is the sum of disposable income and other incomes (in this case, income from stocks and interest on savings): \[ \text{Expected Total Cash Outflow} = \text{Disposable Income} + \text{Interest on Savings} + \text{Income from Stocks} \] \[ \text{Expected Total Cash Outflow} = 4,165 + 0 + 50 = 4,215 \text{ dollars} \] We can observe that the actual total cash outflow (\$[/tex]1,758) does not match the expected total cash outflow (\[tex]$4,215). This discrepancy indicates a significant omission in the budget planning. Potential major omissions may include essential expenses such as: - Utilities (electricity, water, gas) - Groceries - Entertainment - Emergency savings - Healthcare (insurance, medications) - Miscellaneous daily living expenses Given this evaluation, the most significant omission in your friend’s budget is that the total cash outflow calculated from the provided items (\$[/tex]1,758) significantly deviates from the expected total cash outflow (\$4,215), implying that many critical expense categories have been entirely missed in the planning.
Cash Inflows:
1. Disposable income: \[tex]$4,165 2. Interest on savings: \$[/tex]0
3. Income from stocks: \[tex]$50 4. Total Cash Inflow: \$[/tex]4,215
Cash Outflows:
1. Mortgage: \[tex]$1,000 2. Homeowner's Insurance: \$[/tex]60
3. Car payment: \[tex]$373 4. Car insurance: \$[/tex]125
5. Stock purchases: \[tex]$200 First, we calculate the total cash outflow by summing up all the provided outflows: \[ \text{Total Cash Outflow} = 1000 + 60 + 373 + 125 + 200 = 1,758 \text{ dollars} \] Next, we determine the balance by subtracting the total cash outflow from the total cash inflow: \[ \text{Balance} = \text{Total Cash Inflow} - \text{Total Cash Outflow} \] \[ \text{Balance} = 4,215 - 1,758 = 2,457 \text{ dollars} \] Now, we need to compare the calculated outflow with the expected outflow. The expected outflow is the sum of disposable income and other incomes (in this case, income from stocks and interest on savings): \[ \text{Expected Total Cash Outflow} = \text{Disposable Income} + \text{Interest on Savings} + \text{Income from Stocks} \] \[ \text{Expected Total Cash Outflow} = 4,165 + 0 + 50 = 4,215 \text{ dollars} \] We can observe that the actual total cash outflow (\$[/tex]1,758) does not match the expected total cash outflow (\[tex]$4,215). This discrepancy indicates a significant omission in the budget planning. Potential major omissions may include essential expenses such as: - Utilities (electricity, water, gas) - Groceries - Entertainment - Emergency savings - Healthcare (insurance, medications) - Miscellaneous daily living expenses Given this evaluation, the most significant omission in your friend’s budget is that the total cash outflow calculated from the provided items (\$[/tex]1,758) significantly deviates from the expected total cash outflow (\$4,215), implying that many critical expense categories have been entirely missed in the planning.